Indian benchmarks edge lower ahead of RBI policy

Indian benchmark indices witnessed a dismal trading session on Tuesday, as investors turned jittery ahead of the Reserve Bank of India’s (RBI) monetary policy review meet tomorrow. With the excess liquidity in the banking system, RBI is unlikely to cut interest rates on Wednesday to tackle a growth slowdown. The central bank is still grappling with more than $60 billion in excess liquidity after the government’s crackdown on high-denomination notes last year, even after raising the reverse repurchase rate in April and deploying an array of instruments to soak up the funds. Sentiments also remained subdued with the report that Indian companies raised around Rs 33,400 crore in May through private placement of corporate bonds, a slump of 44% from the year-ago level, for business expansion and propping up working capital needs. According to latest data available with markets regulator SEBI, firms garnered a total of Rs 33,389 crore in May 2017, lower than Rs 59,801 crore raised in the year-ago period. Besides, weak trend in Asian stocks also weighed on the trading sentiments.

However, losses remained capped with the report that India has surpassed China to secure the top position among 30 developing countries on ease of doing business. The 2017 Global Retail Development Index (GRDI), now in its 16th edition, ranks the top 30 developing countries for retail investment worldwide and analyses 25 macroeconomic and retail-specific variables. Meanwhile, the progress of the monsoon continues to be stuck along the Kochi-Tondi-Agartala-Williamnagar-Kokrajhar axis linking the west coast and North-East India but it is a matter of a few days before it resumes its northward journey. Even in Kerala, the rains are yet to reach the northern districts beyond Ernakulam and Thrissur, according to trends in recorded rainfall till Monday.

On the global front, Asian equity markets ended mostly lower on Tuesday, with geopolitical tensions in the Middle East and caution ahead of key risk events keeping investors nervous. Crude oil prices extended losses in Asian trades. Investors remained cautious ahead of the UK general election, the ECB meeting and former FBI director James Comey's congressional testimony - all due on Thursday. However, Chinese shares bucked the regional trend to end a tad higher, with consumer and financial shares lending support as investors pondered the impact of new regulations on initial public offerings and ahead of a flurry of economic data. Meanwhile, all the European counterparts were trading in the red where, major indices like DAX and CAC declined over quarter percent.

Back home, after getting cautious start, the local indices slipped into negative in late morning trade on account of profit booking in frontline blue-chip stocks. Thereafter, the indices extended their losses in mid afternoon trade, tracking weak opening European markets. Finally, the NSE’s 50-share broadly followed index Nifty, took a cut of over quarter percent to settle below the crucial 9,650 support level, while Bombay Stock Exchange’s Sensitive Index Sensex slipped by over hundred points and closed below the psychological 31,200 mark. Moreover, the broader markets had to bear a brutal assault, as they went on to underperform their larger peers by quite a margin with BSE’s midcap shaving off 0.62% and BSE’s smallcap shelving  0.65%.  The market breadth remained in favor of decliners, as there were 924 shares on the gaining side against 1774 shares on the losing side, while 160 shares remain unchanged.

Finally, the BSE Sensex lost 118.93 points or 0.38% to 31,190.56, while the CNX Nifty was down by 37.95 points or 0.39% to 9,637.15. 

The BSE Sensex touched a high and a low of 31430.32 and 31172.55, respectively and there were 6 stocks on gaining side as against 24 stocks on the losing side.
The broader indices ended in red; the BSE Mid cap index declined 0.62%, while Small cap index was down by 0.65%.

The only gaining sectoral indices on the BSE were IT up by 2.33% and TECK up by 1.64%, while Consumer Durables down by 2.01%, Power down by 1.62%, Industrials down by 1.38%, Realty down by 1.36% and FMCG down by 1.35% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 3.63%, Infosys up by 2.00%, Wipro up by 0.91%, Dr. Reddy’s Lab up by 0.61% and Adani Ports & SEZ up by 0.26%. On the flip side, Tata Motors down by 3.58%, NTPC down by 2.65%, ONGC down by 2.28%, ITC down by 2.05% and Larsen & Toubro down by 1.60% were the top losers.

Meanwhile, denying any downturn in Indian information technology (IT) sector, Union minister Ravi Shankar Prasad has said that the industry will create good number of jobs in the financial year 2018. The minister's statement comes against the backdrop of media reports that Indian IT firms were in the midst of the industry's largest retrenchment drive due to US President Donald Trump's protectionist policies.

Noting that domestic IT sector worth Rs 9 lakh crore today employs about 40 lakh people directly and 1.4 crore indirectly, the IT minister has said that the recruitments in major firms, including TCS and Infosys, is expected to rise sharply in this fiscal year. He also explained that the export of Indian IT companies outside is close to Rs 7.4 lakh crore and the Software Technology Parks of India (STPI) helping entrepreneurs to export (services) worth about Rs 3.5 lakh crore.

Prasad also said that 6 lakh jobs have been added by the Indian IT companies over the past 3 years of the Narendra Modi-led government. He claimed that retrenchment of 100-200 people had happened in the sector on performance ground. The minister added that the Indian digital economy was going to become $1 trillion in the coming 5 to 7 years.

The CNX Nifty traded in a range of 9,709.30 and 9,630.20. There were 15 stocks in green as against 36 stocks in red on the index.

The top gainers on Nifty were TCS up by 3.88%, HCL Tech up by 3.37%, Infosys up by 2.22%, Tech Mahindra up by 1.42% and Wipro up by 1.42%. On the flip side, Tata Motors down by 3.44%, NTPC down by 2.86%, Indiabulls Housing Finance down by 2.66%, Tata Motors - DVR down by 2.65% and ONGC down by 2.48% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 4.84 points or 0.06% to 7,520.92, Germany’s DAX decreased 57.58 points or 0.45% to 12,765.36 and France’s CAC decreased 13.61 points or 0.26% to 5,294.28.

Asian equity markets ended mostly in red on Tuesday, with geopolitical tensions in the Middle East and caution ahead of key risk events keeping investors nervous. The dollar hit a six-week low versus the yen and gold prices rose on safe-haven demand as investors looked ahead to the UK general election, the ECB meeting and former FBI Director James Comey's testimony before the Senate Intelligence Committee - all scheduled for Thursday. Oil extended overnight losses as investors shifted their focus back on a supply glut and speculation mounted that a diplomatic rift among some of the most powerful states in the Arab world could hamper a global deal to reduce oil production. Japanese shares ended lower, with a stronger yen and weak overnight cues from Wall Street weighing on markets. South Korean markets were closed for Memorial Day. Though, Chinese shares bucked the regional trend to end a tad higher, with consumer and financial shares lending support as investors pondered the impact of new regulations on initial public offerings and ahead of a flurry of economic data.